As government measures to rein in the economy began to bite growth in fixed asset investment slowed last month.

Urban fixed asset investment from January to July rose 30.5 percent year-on-year to 4.48 trillion yuan (US$560 billion) compared to the annualized growth of 31.3 percent in the first half of the year, the National Bureau of Statistics (NBS) said yesterday.

It didn't give specific figures for July but Ma Qing, a macro economy analyst at CITIC Securities, said the decline in the month's growth rate was significant. Growth in July was only around 27.4 percent from a year ago while it had been 33 percent the previous month, he said.

Investment growth seemed to have peaked in June, he said, and the latest figures indicated an obvious slowdown. "It means the macro-control measures have started to take effect and that means less risk to the economy," Ma commented.

Rapid investment growth and concerns of potential overheating in the economy forced the central government to adopt a series of measures to cool down investment and lending since the end of April.

They include a lending-rate hike and higher reserve requirements for commercial banks twice within two months in addition to other credit curbs and land control measures. The authorities also set a higher threshold for new construction projects.

Ma estimated that annual growth in fixed asset investment would be 27-28 percent based on the present trend.

Real estate investment in the first seven months grew by 24 percent from a year ago to 941.1 billion yuan (US$117.6 billion) compared to 24.2 percent in the first six months, according to the NBS figures

Investment in coal mining rose 42.5 percent during the January-July period compared to 45.7 percent in the first half. Suppliers of power, heat, petrol and natural gas saw a slight investment increase in July. Industrial output also grew at the slowest pace in July since April, according to the NBS figures.

Experts said the government could still adopt more tightening measures in the coming months to consolidate the economy and prevent overheating. The central bank remains concerned about mounting inflationary pressure and growing money supply.

The M2, the broad measure of money supply, maintained rapid growth in July rising 18.4 percent year-on-year -- 2.1 percentage points higher than the same period a year ago. Outstanding renminbi loans grew by 16.3 percent at the end of July, 3.2 percentage points higher than a year earlier.

(China Daily August 17, 2006)